A Breakthrough of Air Industry in the UAE

It is quite weird and interesting to witness how previously unanimous economic leadership of the USA and Europe in the world either negates or gets equalized with the developed economies of the Middle and Far East. For instance, China has recently become a leader in global selling of automobiles overcoming the leadership of the United States. Now, it is apparently a turn of the fast-growing United Arab Emirates to retrieve a leading position from European market participants. The specialists indicate about serious expansion and increasing of air industry in the UAE for the recent years, and, unsurprisingly, European airlines such as Lufthansa and Air-France take a serious concern about own competitive advantages.

For me it is not a miracle that the competition with the Middle East Airline Companies – particularly ‘Emirates’ – is a central threat for influential European air-carriers. For the recent years Arabian airline companies such as ‘Emirates’, ‘Qatar’, ‘Etihad’ has been actively gaining the passengers for long-distance directions, offering the routes with stop-overs in the Middle East territory. At the same time, ‘Emirates’ is the largest exploiter of ‘Boeing 777’ and ‘Airbus380’ planes. Thus, in addition to 90 ‘A380’ planes there will be new 32 vehicles, along with additional 58 models of Boeing. And now, it is a matter of opening Terminal 3 at the Dubai International Airport which impresses by both its geographical sizes and level of services (Mouawad). At the moment, we can potentially say that, with keeping this pace, the passenger traffic of ‘Emirates’ will be growing on approximately 20% each year.

Obviously, we deal with well-designed and well-timed economic strategy of global expansion involving numerous factors of progressive development: sooner or later, the beneficial location of Dubai hub and enormous passenger turnover rate would allow ‘Emirates’ to win the major part of European passengers. It is an aggressive and offensive strategy of penetration into market which implies the radical exploitation of organizational and financial resources for expansion. Today large-scale Terminals of Dubai offer very attractive services for passengers of entire Asian area: “there are 184 flights a week from Dubai to India, to cities like Ahmedabad, to commercial hub in the state of Gujarat, to 17 cities of Africa, to cities of China, and so on” (Mouawad). Obviously, the objective of “Emirates” aggressive strategy is to seize new transfer units across Asia and offer more profitable propositions than its European business counterparts. Even a blind man would notice the efficiency of such actions and productivity of investments of the UAE businessmen.

Now, let us think about the reaction of ‘Lufthansa’ and ‘Air-France’. Just put yourself in their shoes. They are seriously confused, even if they conceal it. Of course, on the one hand, we can hear statements of their representatives like “We welcome any rational and fair competition”; but, on the other hand, they have been, apparently, designing some plan of counter-measures. European air leaders have already stated that “Emirates” relies on the governmental support, and, most notably, purchases new models of ‘Boeing’ and ‘Airbus’ on the base of extra-profitable terms of export crediting, although these claims remain unconfirmed. In general, are there any methods for ‘Lufthansa’ and ‘Air-France’ to resist the effects of ‘Emirates’ expansion? If we are talking about legal methods of competition, I do not think so. At the current moment, though. Beneficial location and quick obtaining of Asian transfer zones results in serious advantage for ‘Emirates’ and general expansion of the UAE’s air industry.